In the prior art, a potential borrower who needs a loan typically either searches various lender advertisements for information, searches interest rate listing services, contacts a number of lenders to request information or simply applies for a loan without comparison shopping. Lenders typically present their loans with the best terms in advertisements, which may not be the loan for which the potential borrower would be able to qualify.
Rate listing services are of limited value as they generally do not present a comprehensive description of loan features, pricing, terms, and conditions. Furthermore, the published rates do not consider the attributes, including the risk profile of the respective borrower. The services generally publish the lender's best rate, for which the potential borrower may not qualify.
Alternatively, contacting directly a number of lenders typically requires the potential borrower to go through a tedious process of contacting each lender and of manually filling out loan applications. The potential borrower wastes much time and effort in either traveling to the lender or in having the lender send information and application forms. The required time and effort in searching for available loans and in filling out loan applications acts as a barrier to the borrower for acquiring a maximum amount of information about loans in the loan market, and even about loans available from an individual lender. Although the automated loan processing system disclosed in U.S. Pat. No. 5,611,052 to Dykstra et al. provides automation to the lender for approving or disapproving loan applications, such a system does not automatically determine a best available loan for a potential borrower.
The worst case for the borrower occurs when he or she obtains a loan without comparison shopping. This is the result of the borrower having insufficient time to search for information or limited confidence in his or her ability to analyze loan terms when selecting a loan. Searching without comparison shopping is generally the way potential borrowers with limited financial sophistication obtain loans. This failure to comparison shop often results in the potential borrower contracting to pay a higher interest rate or accepting less favorable terms than possible with comparison shopping.
Furthermore, in the prior art, lenders typically are able to establish and maintain one or only a few set of general loan acceptance criteria. A single set of loan pricing and terms is offered to all borrowers who satisfy this criteria. Offering such a limited number of loans requires that all borrowers, within such an unsegmented population of borrowers, be offered an interest rate and terms that are appropriate for the average borrower within that population. Thus, borrowers with below average attributes will be offered interest rates and terms that are too favorable based upon their default risk, prepayment risk and other attributes, which therefore will result in an unprofitable loan for the lender. Borrowers with above average attributes will be offered loans that are too unfavorable relative to their attributes. In the prior art, lenders are unable to establish and maintain a sufficient number of loans with corresponding loan acceptance criteria to allow them to precisely scale and match loan attributes to the borrower's attributes.
Furthermore, a lender with the prior art loan origination procedure may not have access to information about loan terms provided by other competitive lenders to borrowers having similar qualifications. Thus, a lender may waste time and resources in establishing and offering uncompetitive loan terms.
Consequently, a loan origination system is desired that automatically matches any potential borrower to the best available loan and that aids in easy access to information about the loan market for both potential borrowers and lenders. With such an improved loan origination system, any potential borrower can have fast and efficient access to a best available loan, and the lender can offer more accurate and competitive loan terms to a potential borrower having a corresponding set of borrower attributes.